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December, 2010 Newsletter

+++++++++++ December 1, 2010 +++++++++++++++++++

Introduction:  Sales Decline
Mortgage Rate Update: Rates Track Upward
This Month’s Tip: Compare Before You Commit

Introduction: Sales Decline

Welcome to the December edition of the Home Buyer’s
Newsletter. Our wishes for a happy holiday season to all.

Keep your eye on market activity.  It will be important
to see if the October sales figures are just a momentary
blip of the beginning of a longer term trend.

Existing-home sales retreated in October on the heels of
two strong monthly gains, according to the National
Association of REALTORS®.

Existing-home sales, which are completed transactions
that include single-family, townhomes, condominiums and
co-ops, declined 2.2 percent to a seasonally adjusted
annual rate of 4.43 million in October from 4.53 million
in September, and are 25.9 percent below the 5.98 million-unit
level in October 2009 when sales were surging prior to the
initial deadline for the first-time buyer tax credit.

Year-to-date there were 4.149 million existing-home sales,
down 2.9 percent from 4.272 million at this time in 2009.

Lawrence Yun, NAR chief economist, said the recent sales
pattern can be expected to continue. “The housing market
is experiencing an uneven recovery, and a temporary
foreclosure stoppage in some states is likely to have held
back a number of completed sales. Still, sales activity is
clearly off the bottom and is attempting to settle into normal
sustainable levels,” he said. “Based on current and improving
job market conditions, and from attractive affordability
conditions, sales should steadily improve to healthier levels
of above 5 million by spring of next year.”

On the new home side, sales of new single-family houses
in October 2010 were at a seasonally adjusted annual rate of
283,000, according to estimates released jointly on November
24 by the U.S. Census Bureau and the Department of Housing
and Urban Development.

This is 8.1 percent (±16.1%) below the revised September
rate of 308,000 and is 28.5 percent (±12.6%) below the
October 2009 estimate of 396,000.

The median sales price of new houses sold in October 2010
was $194,900; the average sales price was $248,200. The
seasonally adjusted estimate of new houses for sale at the
end of October was 202,000. This represents a supply of 8.6
months at the current sales rate.

Mortgage Rate Update: Rates Track Upward

For the month of November, mortgage rates began to trend
upward.  30-year fixed-rate mortgages, which averaged 4.24%
at the first reporting period of the month, rose to an
average of 4.40% in the last period according to mortgage
company Freddie Mac.  In the case of 15-year fixed-rate
mortgages, the increase was from an average of 3.63% to an
average of 3.77%.  Even with these increases, it is important
to remember that these rates continue to be among the lowest
in history.

Mortgage Rate Update:
For current average mortgage rates, see the rates page.

For more information on mortgages, visit the Mortgage Section

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This Month’s Tip: Compare Before You Commit

As we enter the last month of 2010, we cannot recall a single time
when it was more important to have a clear picture of housing values
than it is right now.  The huge upheaval in Real Estate, with falling
prices, massive numbers of foreclosures and short sales makes it
imperative that a buyer is at the top of their game plan when it comes
to pricing.

If you don’t want to run the risk of paying too much for a home,
and be sure that you aren’t paying more than market value for your
home purchase then a CMA is a critical part of the process.
A CMA–Comparative (or Comparable) Market Analysis–is the
strongest tool in your home buying arsenal to give assurance
that you are not overpaying.

A CMA is a recap of housing activity in the area in which you are
interested, focusing on 3-10 properties that are similar in size and
amenities located in the same neighborhood or nearby. The CMA
will list specific details (number of bedrooms, number of baths,
total room count, square footage, age, etc.) for similar properties
that are currently on the market (active listings), those that are under
contract but not yet closed (pending listings), have closed and transferred
ownership (sold listings) as well as those listings that have either
expired without selling or have been withdrawn by the seller (taken off
the market). Because a CMA compares similar properties it can
give a buyer a pretty clear snapshot of current housing values in a
specific housing market. Although the CMA is very important, it
cannot be used as an absolute determination of value, since it generally
does not put a lot of weight on condition, an obviously important

While the CMA will list homes that are currently on the market as well
as those that are pending or have expired, it is those properties that
have sold and closed that give the most information. Sold and closed
information is important, since these detail specifically what buyers
are willing to pay (and lenders are willing to lend) for specific properties.
Don’t make the mistake of putting too much weight on the prices
of properties currently on the market. These homes could be wildly
overpriced compared to the price for which they eventually sell for.
Likewise, one of the biggest reasons that a property listing will
expire without selling is because it is overpriced, so the prices of these
expired listings should be taken with a grain of salt.

What does a CMA include? You will find at least the following information
on the “subject property” (the one you want to buy) and anywhere from
3 to 10 additional properties:

+ Street address
+ Square footage
+ Number of bedrooms, number of baths, number of total rooms
+ Age
+ Listing price and sold price if closed

To see an example of a CMA, visit that page on the Home Buyer’s
Information Center site: CMA

Where can you get a CMA? If you are being represented by a Buyer’s
Agent, they should be able to develop a CMA for you in a short amount of
time. Since virtually all Multiple Listing organizations are computerized,
the Buyer’s Agent can pull a CMA up on their home or office computer
and have it available to you. If you are dealing with an Agent who is
representing the seller (the home in which you are interested is their
listing) it may be that the Agent cannot develop a CMA for you, since
their representation of (and loyalty to) the seller may preclude releasing
any information that could compromise the seller’s position. For example,
if a CMA showed that the average property in the neighborhood was
selling for $147,000 and the home was listed for $165,000, it is highly
unlikely that the seller’s Agent would give that information to a buyer.
This is one of the many reasons that a home buyer should always
strongly consider using a Buyer’s Agent, if one is available. See a
discussion on the site:Buyer Agency

Summing Up

A CMA can be your most important tool in negotiation, since it will detail
exactly where, price-wise, the house in which you are interested is positioned.
Is it underpriced (a bargain), priced “on the money” (a fair price for both buyer
and seller) or overpriced (time to either negotiate hard or walk away). As
we have mentioned many times in the past, if you overpay for a home in a strongly
appreciating market, the market will eventually cover your mistake. If, however,
you overpay in a flat or declining market, you will end up holding the financial

Next Month’s Tip: The Selling Price is Only the Beginning

The Home Buying Checklist

Many of our visitors have said that one of the most valuable
aspects of the Home Buyer’s Information Center is the
Buying Checklist, where they can make sure that all
the bases have been touched. You can find the checklist here.

As always, if you have suggestions for improving the
site, or topics you would like to see addressed in
this newsletter (or, if you have used the Home Buyer’s
Information Center to successfully purchase a home),
drop us a quick line here.

A special thanks to all those who have written to let us know
that they have found the Home Buyer’s Information Center a
helpful resource in their buying process.

Have a great month and good luck in all your endeavors!

The Team at the Home Buyer’s Information Center